Regulating Self-Regulation? The Politics and Effects of Mandatory CSR Disclosure in Comparison

40 Pages Posted: 1 Mar 2017

See all articles by Gregory Jackson

Gregory Jackson

Freie Universität Berlin

Julia Bartosch

Free University of Berlin (FUB) - Department of Business and Economics

Daniel P. Kinderman

University of Delaware - Political Science & International Relations

Jette Steen Knudsen

Tufts University - The Fletcher School of Law and Diplomacy

Emma Avetisyan

Audencia Nantes School of Management

Date Written: February 28, 2017

Abstract

The literature on new forms of governance suggests important trade-offs regarding the role of government in relation to corporate social responsibility (CSR) activities. Theories associate state regulation with clear minimum standards and high compliance, but also suggest advantages of self-regulatory approaches that allow greater flexibility and support best-practices. Given these potential trade-offs, France, Denmark, and the UK were pioneers of a hybrid approach: mandatory non-financial disclosure (NFD). This article shows that despite the different motivations for mandatory NFD in these countries, the disclosure requirements are “soft” and flexible – acknowledging demands from business “that one size regulation doesn’t fit all.” The article further examines the effects of these regulations on CSR activities in 24 OECD countries using the Asset4 ESG database. Our analysis shows that firms in countries with mandatory non-financial disclosure adopt significantly more CSR activities. However, our analysis also highlights that mandatory disclosure decreases the variance between firm activities, contrary to arguments about flexibility. Furthermore, it does not lead to a decline in corporate irresponsibility. These results have implications for our understanding of regulatory trade-offs and how to promote more effective forms of CSR.

Keywords: Mandatory Disclosure, Corporate Social Responsibility, Private Governance, Regulation, Government

Suggested Citation

Jackson, Gregory and Bartosch, Julia and Kinderman, Daniel P. and Knudsen, Jette S. and Avetisyan, Emma, Regulating Self-Regulation? The Politics and Effects of Mandatory CSR Disclosure in Comparison (February 28, 2017). Available at SSRN: https://ssrn.com/abstract=2925055 or http://dx.doi.org/10.2139/ssrn.2925055

Gregory Jackson (Contact Author)

Freie Universität Berlin ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

HOME PAGE: http://www.wiwiss.fu-berlin.de/institute/management/jackson/team/gjackson/index.html

Julia Bartosch

Free University of Berlin (FUB) - Department of Business and Economics ( email )

Boltzmannstrasse 20
D-14195 Berlin, 14195
Germany

Daniel P. Kinderman

University of Delaware - Political Science & International Relations ( email )

United States

Jette S. Knudsen

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Emma Avetisyan

Audencia Nantes School of Management ( email )

8 route de la Jonelière, BP 31222
Nantes Cedex 3, Cedex 3 44312
France

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